M&M Q3 2024-2025 Call Highlights: EV Boom, Tractor Gains and Market Expansion!

Mahindra & Mahindra Ltd., a diversified Indian conglomerate known for its significant presence in the automotive, farming equipment, and financial services sectors, in its Q3 earnings call reported strong EV interest, particularly from luxury car owners, with bookings opening across 250 plus dealerships on February 14th. Management mentioned that while EVs will have lower percentage margins than ICE vehicles, EBIT profitability per vehicle will be similar after PLI benefits, and the company is taking a measured production ramp-up approach to ensure quality. The company plans to increase ICE vehicle production capacity for 3×0 and ROXX by 1,500-2,000 units each within 3-4 months. The company also reported strong tractor market share growth but noted concerns about slower LCV segment growth despite favorable conditions.

Mahindra & Mahindra delivered exceptional Q3 results across its business units, with M&M’s consolidated net profit rising approx.. 20% on revenue growth of 20%. The automotive division achieved 16% volume growth with SUV market share gaining 200 basis points and maintaining 51.9% LCV market share. The farm equipment business reached a record Q3 market share of 44.2% with 20% volume growth. Mahindra Financial Services was a standout performer, with net profit surging 62.7% to INR899.5 crore and a remarkable 97% reduction in impairment charges following credit model recalibration. Despite some challenges including international farm headwinds and measured EV production ramp-up, the company maintained strong ROE around 18% with EPS growth exceeding its 15-20% target. Key product successes included the XUV 3×0, five-door Thar variant, new electric SUVs BE 6 and XEV 9e.

Continue Reading: Discover the Vital Insights from Mahindra & Mahindra Ltd.’s Earnings Call!

Financial/Operational Metrics:

• Total Revenue: INR41,470 crore, up 17% YoY.
• Net Profit: INR3,181 crore, up 20% YoY.
• Basic EPS: INR28.51, up 19% YoY.
• Total Vehicles Sold: 2,45,499 units, up 16% YoY.
• Total Tractors Sold: 1,20,624 units, up 20% YoY.

Outlook:

• Auto and Farm Business: Continued focus on margin expansion. Strength in SUV market share and new electric origin SUVs.
• Farm Industry: Expected to grow over 15% in Q4, leading to 7% plus full-year growth.
• EV Strategy: Premium positioning based on design, HMI, and high-tech features.

 

Analyst Crossfire:

• EV Market Learnings & Strategy (Analyst): The 500 km range and battery warranty have successfully addressed major consumer concerns. Initial demand is strong, with customers from premium segments showing interest. Charging infrastructure remains crucial for long-term growth, but initial adopters are multi-car owners who are less reliant on public charging (Rajesh Jejurikar, ED & CEO, Auto & Farm Sectors).

 

• EV Booking/Customer Profile & Demand Expansion (Analyst): Due to high demand, the company expanded its initial rollout from 20 cities to 250+ dealership outlets by February 14. Many Phase-3 markets requested earlier access, prompting this expansion. A significant portion of bookings are from new-to-Mahindra customers who typically buy luxury brands in the ₹25-30 lakh segment, indicating strong aspirational appeal. (Rajesh Jejurikar, ED & CEO, Auto & Farm Sectors).

 

• Tractor Market Share Growth, Inventory & Outlook (Analyst): The Swaraj brand transformation and filling product gaps in 20-30 HP segment drove market share gains. Growth in South and West India contributed to positive momentum. Inventory corrections were completed in Q3, ensuring no significant adjustments in Q4. Market share growth was achieved despite inventory reductions. (Anish Shah, Group CEO & MD).

 

• LCV Segment Growth Lag, EV Profitability & PLI Benefits (Analyst): Despite strong tractor growth, the 2-3.5T LCV segment has only single-digit growth, which is unexpected given economic recovery. No clear explanation yet, but the company remains hopeful for improvement. EBIT per vehicle factors in PLI benefits, which are critical for cost competitiveness and ROI. Long-term margins should align with ICE vehicles as cost structures improve (Anish Shah, Group CEO & MD).

 

• Auto EBIT Margin & One-Offs, ICE Capacity Constraints & Debottlenecking (Analyst): The 9.7% EBIT margin does not include marketing spend for the EV unveil, which is accounted for separately in the consolidated auto results (8.6% EBIT). Price hikes totaled 1.5% (0.7% YTD Dec + 0.8% in Jan). Gasoline demand for 3XO exceeded projections, requiring capacity expansion. Production will increase by ~2,000 units in the next 3-4 months. Rox capacity is being optimized with full fungibility between 3-door and 5-door models (Rajesh Jejurikar, ED & CEO, Auto & Farm Sectors).

 

• Contract Manufacturing & Transfer Pricing, Auto Export Strategy (Analyst): M&M earns margins only on conversion costs and product development expenses, not on raw material costs. Product capex is booked in Mahindra Electric (MEAL), separate from transfer pricing. Phase 1 expansion focuses on existing markets (South Africa, Australia, New Zealand, Chile). Phase 2 will introduce a global lifestyle pickup for both LHD and RHD markets (Rajesh Jejurikar, ED & CEO, Auto & Farm Sectors)